Cielo Waste Solutions Corp. (CMC.V) Earnings Call Transcript & Summary

Good morning. My name is Anis, and I'll be your conference operator today. At this time, I would like to welcome everyone to the Cielo Waste Solutions Fiscal Q1 2022 and Corporate Update Conference Call. [Operator Instructions] Thank you. Please note, this call contains certain forward-looking statements and forward-looking information within the meaning of applicable Canadian securities laws. All statements other than statements of present or historical facts are forward-looking statements. Forward-looking statements are often, but not always, identified by the use of words such as anticipate, achieve, could, believe, plan, intend, objective, continuous, ongoing, estimate, outlook, expect, may, will, project, should or similar words, including negative thereof, suggesting future outcomes. Forward-looking statements are subject to both known and unknown risks, uncertainties and other factors, many of which are beyond the control of the company that may cause the actual results, level of activity, performance or achievements of the company to be materially different from those expressed or implied by such forward-looking statements. Cielo is making forward-looking statements, including related to the continued operations of the facility, the ability of the company and facility to achieve continuous production continue to produce steady state of volume and the timing for this, the anticipated impact of the Cielo's technology on waste and plastics issues, the creation of jobs arising from Cielo's technology and facilities, entry into the JV agreements and the building of additional facilities pursuant to the JV agreements, including the ability to build larger facilities that use more waste and produce more fuels and use of the facility at the test facility and ability to test additional waste streams. Although the company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking statements, there may be other factors that could cause results not to be as anticipated, estimated or intended. Forward-looking statements are not a guarantee of future performance and involve a number of risks and uncertainties, some of which are described herein. Such forward-looking statements necessarily involve known and unknown risks and uncertainties, which may cause the company's actual performance and results to differ materially from any projections of future performance or results expressed or implied by such forward-looking statements. Any forward-looking statements are made as of the date hereof, and except as required by law, neither the company assumes no obligation to publicly update or revise such statements to reflect new information, subsequent or otherwise. For further information on risk factors, please view the company's most recent management discussion and analysis filed with the Canadian securities regulatory authorities and available on SEDAR or by contacting sale directly. All amounts discussed today are in Canadian dollars, unless otherwise stated. Mr. Allan, please go ahead, sir.

Thank you, Anis. Good morning, and thank you for joining us. I am pleased to be here today with my fellow corporate officers from Cielo, including Gregg Gegunde, our newly appointed CEO and COO; Stephanie Li, our CFO; and Chris Sabat, our Corporate Secretary and General Counsel. I'm pleased to confirm that the members of our Board are also listening on today's call, providing further demonstration of the level of commitment to Cielo. As a team, we very much appreciate you joining us for an update on our firm as well as a run-through on Cielo's financial results and our outlook for the future. As many of you know, I founded Cielo about 17 years ago based on years of research and development work that we were directed to develop and commercialize, a unique technology to transform certain types of waste into high-grade diesel, kerosene, which is aviation, jet and marine fuel and naphtha. With a lot of hardware compressor vans, and ongoing adaptation to changing market conditions, we have positioned Cielo on an exciting path forward. Based on our proof of concept, we have the opportunity to commercialize this process at a large scale and are committed to bringing this vision to reality. We truly believe we can drive a cleaner energy future and more responsible approach to addressing the landfill waste, not only for the benefit of our company and the shareholders, but also to the society as a whole. To support the company evolution, I'm very proud to have assembled the team that joins me today. As Cielo has continued to grow and progress, so have our needs as an organization. Listing on TSXV opens up a lot of new doors and potential exposure to new investors and new pools of capital. As a result, we are capitalizing on this opportunity to continue strengthening our team and enhancing our internal infrastructure, governance and procedures. The team at Cielo is comprised of a group of like-minded individuals who are all motivated by the opportunity to generate a greener energy supply, which can improve sustainability of our planet. In addition, we are unified in our intention to build an organization capable of generating a meaningful return for to our shareholders. Thank you for your continued trust and support of our vision. I would like to now hand over the call to Stephanie Li, our Chief Financial Officer, to take you through the highlights of Cielo's financial results.

Thank you, Don. Cielo filed its financial statements and MD&A for the 3 months ended July 31, 2021, after market closed yesterday. And we're very pleased to have the opportunity to share Cielo's financial highlights. As at July 31, 2021, the company had CAD 14.1 million of cash and working capital surplus of CAD 5.1 million, which is an increase of CAD 5.8 million compared to a CAD 0.7 million deficiency as at April 30, 2021, primarily as a result of the decrease in short-term warrant liability upon the exercise of warrants, partially offset by the decrease in cash. Total assets increased by CAD 1.2 million as at July 31, 2021, compared to April 30, 2021, due to the increase in property, plant and equipment related to the construction activities at Aldersyde facility and increase of prepaid expenses, partially offset by the decrease in cash related to increased R&D and G&A expenditures. Total liabilities decreased by CAD 8.2 million as at July 31, 2021, compared to April 30, 2021, due to the exercise of liability classified warrants and the conversion of convertible debentures, partially offset by the increase in accounts payable and accrued liabilities. The net loss in the current quarter was CAD 3 million, an increase of CAD 1.7 million compared to a CAD 1.3 million net loss for the same period in the prior year. The increase in net loss is primarily attributable to 2 key factors: G&A expenses increased by CAD 1 million, mainly due to salary and benefit expenses for the additional employees hired to facilitate the growth of the company and professional fees incurred related to the listing of TSXV in June 2021. R&D expenses increased by CAD 1.5 million in the current quarter due to the increase in research and development activities conducted at the Aldersyde site facility and the shutdown of the Aldersyde facility during the same period in the prior year due to the COVID-19 pandemic. Cielo's primary objective for managing liquidity and capital resources is to ensure the company has sufficient funds available for research, development and other corporate activities. As of July 31, 2021, the company had CAD 14.1 million of cash and working capital surplus of CAD 5.1 million. The company will require additional capital to fund the cost relating to research, development and other corporate activities over the next year and beyond. The company will continue to explore alternatives to generate additional financing, which may include raising additional equity, debt or entering into strategic partnerships. With the company's current financial position and go-forward plans, we believe that Cielo has the financial flexibility to execute our near to mid-term strategy and continue our path to commercialization. As Gregg will discuss, we have a clear line of sight to commercialization with a structured plan to guide the organization. With that, I'll hand it over to Chris.

Thanks, Stephanie. Building on both Don and Stephanie's words, I'd also like to thank you for taking the time to join us here today. First, I want to tell you why I joined Cielo. I was a shareholder prior to joining the organization. And having heard Don's vision, to be frank, I wanted to be a part of it. Don's vision is one that captivates and one of the key takeaways today is that the fundamental components are intact. Cielo does convert waste to fuel, and we are all aligned to Cielo succeed. One area that we can and will do better is in communicating with our shareholders. We are all aware that like this management team, you have invested in Cielo. We are keen to open the dialogue and broadly engage with our shareholders. Our team of corporate officers is highly aligned with and committed to creating shareholder value. Please be patient, give us an opportunity and you will experience a new level of engagement through this management team. As Gregg and the operations team move towards continuous production, the reality is that the organization as a whole also needs to be in a position to support operations once we are in this state and ready to begin the construction of additional facilities. Readiness for this future state is a significant part of my role. While the work of Gregg's team is the most interesting, we need a highly skilled group of professionals that are ready to engage with local and provincial governments, manage joint venture relationships, procure feedstock, equipment and materials and also manage our human capital. This executive team will be ready once continuous production is achieved to capitalize to the fullest extent possible. As Cielo has continued to evolve our organization and enhance our internal infrastructure, like many growing companies, we faced some unique circumstances. Cielo is committed to establishing a strong, committed and active Board of Directors, a group who is prepared to roll up their sleeves as a part of the governance function, hold management accountable and represent the shareholders. Last week, we announced that 2 recently appointed Board members had resigned, and we understand that this raises questions. The team at Cielo recognizes that the degree of involvement, engagement and commitment required to effectively serve on a Board such as ours, may not align perfectly with certain individuals personal and professional situations. The Board and management will continue to move Cielo forward. Our Board has clearly expressed that we are not interested in a particular number of Board members, and we're also not in a rush. The Board is seeking to offer the opportunity to the right individuals to be a part of Cielo. At the end of the day, what Cielo needs is to attract Board members of the commitments and caliber needed to take Cielo to the next level, and that is what we're in the process of doing. We have an active Board refresh and recruitment campaign underway, and we'll continue to keep our shareholders apprised of developments. To address this, we will file an amended and restated notice of Annual and General Meeting of the Shareholders to be held on October 21, 2021, and a related amended and restated management information circular and form of proxy. As these efforts continue, our current Board is implementing key performance indicators and other Board effectiveness measures to ensure that the full Board is held accountable. Our Board will not be passive. We'll be actively holding management accountable to generate value for our shareholders. This, coupled with our ongoing restructuring and certain executive roles and responsibilities, we have streamlined the company internally, and this will enable Cielo to advance to commercial production at an accelerated pace with more stringent and improved internal controls. These steps are key to building an organization with a strong governance framework and a rightsized executive team to make decisions that are in Cielo's best interest. Thanks again for taking the time to join us today, and I'll now pass it over to Gregg.

Thank you, Chris. Good morning, and welcome, everyone, to our conference call. Don has been the face of Seattle since the beginning of this journey 17 years ago. The name Don Allan is synonymous with Cielo, and that is who we think of when we talk about Cielo. In accepting the role of CEO and COO, I would like to take this opportunity to introduce myself to you. I am a professional engineer in chemical engineering with 30 years of industry experience that spans across processes, systems, design, implementation, operations and health and safety. I have more than 15 years' experience in leadership and executive roles that I have been directly involved in and have overseen very large operational activities, including capital and operational budgets of more than CAD 2 billion and have had more than 2,000 employees under my supervision. And my experience and background brings the standard, systems, processes, accountabilities and leadership that are relevant to Cielo as our organization adheres to the increasingly rigorous standards expected by publicly traded companies and as we grow towards commercialization. In my role as CEO and COO, I am committed to formulating and overseeing the execution of Cielo's strategy. I have high standards for myself and hold myself accountable to our employees, to our contractors, to our shareholders, to our Board and to our management team. I measure myself by unwavering high ethical standards, trust and transparency, and I work with people that have similar standards. As a fellow shareholder and Executive Officer of Cielo, I'm proud to be here today introducing our senior management team. I take great pride in working alongside our CFO, Stephanie Li; our Corporate Secretary and General Counsel, Chris Sabat; and of course, our founder, Don Allan. We are an effective team. As you know, Cielo has taken significant steps to improve our operational position to streamline management, ensuring appropriate oversight, pursue aggressive operational cost controls and above all, secure a sound governance position that can underpin the company's growth. We have taken appropriate measures across both corporate and operational processes to bolster the underlying strength and integrity of our organization. We have put in place and will continue to build a robust internal engineering team, which will reduce our reliance on external engineers or consultants, while ensuring we maintain control over all our processes and continuously drive down overall costs within the organization. Contributing to both cost and operational efficiencies is the opening of our Calgary office. Being centralized and united in a single collaborative environment can support cost controls, budgeting processes and capturing synergies while enabling Cielo to attract additional professionals who are focused on creating a successful organization and building an effective corporate culture that embodies our values. In addition, we have prioritized a renewed focus on ensuring the health and safety of our employees, contractors and our partners while minimizing the environmental footprint of our operations. While we spoke to this in our previous press release issued on Monday, I wanted to expand a bit more on our operational update. The desulfurization process unit is still on track. Yesterday, we completed the final system checks, and we began to warm the system up. Our plan is to begin feeding diesel into the system today as I speak here today. Once the unit is online and stabilized, Cielo's primary objectives will be to confirm the availability to produce diesel with a sulfur content that complies with road diesel requirements, to monitor trend and measure the system performance parameters for design purposes and to gain an understanding of the expected operating costs. While continued operation of the desulfurization unit is not a critical aspect to our operation, it will operate the unit as it is required. Aldersyde side is Cielo's demonstration facility. It is a facility that will continue to develop, improve and demonstrate concepts. Over the past quarter, several modifications were made to the facility in an effort to achieve continuous production. Although they improved the systems run time, the data and information we gained from this, helped shape much crisper understanding of the limitations. Feedback from these modifications, systems performance and a robust engineering approach has given us the ability to improve the overall system design. We are undertaking engineering design enhancements and refined system modifications to the existing process now. Our immediate focus is demonstrating continued steady state production operations. This includes 3 major components of the process that are currently in the design phase. One is the inlet feed system, the reactor itself, and the biomass waste management system. As we work through the engineering design, equipment procurement and construction time lines, we will provide dates on our progress. Another step forward and in parallel with the Aldersyde work that we are executing on, Cielo is also in the design stages of a scale-down version of our complete process system, which is intended to mimic a full scale state-of-the-art 4,000 liter per hour facility. The design basis for this is a 60 meter per hour pilot plant. Based on our current time line, we anticipate approaching the fabrication and construction phase of this pilot towards the end of Q1 2022, which is planned at Cielo's new recently announced site at Fort Saskatchewan, Alberta. With this research facility, Cielo intends to achieve a very high degree of detailed performance characteristics related to feedstock yields, optimum carrier fluid design, reactor design, catalyst experimentation and a detailed material balance for the system. The 60 liter per hour system is expected to give Cielo the flexibility to experiment with a greater range of pressure and temperature regimes, reactor configurations and catalysts, which we believe can greatly enhance the quality of the fuel yield. The detailed lab-grade engineering output will provide confidence of a system as we move to design full-scale commercial plants with predictable performance, capital cost expectations and operating cost metrics. As the Aldersyde facility continues to provide parser, large-scale proof-of-concept while also providing revenue, on a parallel path, the pilot will give us a much higher degree of engineering granularity. Collectively, this data will be the basis for the refined engineering design of 4,000 liter per hour full-scale facilities that we are planning. As a responsible and trustworthy organization, Cielo is focused on ensuring the health and safety of our employees, contractors and its partners, while also striving to minimize the environmental footprint of our operations. We continue to focus on improving health and safety measures across Cielo's operations. Cielo has also established a robust internal engineering team, which enables us to minimize the reliance on external engineers or consultants, maintaining control over the intellectual property and our processes and drive down overall costs within the organization. Cielo has built a professional working relationship with a leading third-party engineering consultant firm that we can draw upon as needed to ensure the company is ideally positioned to execute. Through the development and implementation of new and more rigorous engineering standards, management expects to have stronger business processes and feedback controls, which has been the primary focus over the last quarter and will continue to be the focus Cielo continues towards commercialization. In the coming weeks, we intend to invite shareholders and other stakeholders to join us in a more in-depth review of Cielo's operations, key milestones and upcoming catalysts by way of virtual Investor Day details for which we'll be -- will be provided soon. On behalf of our executive team, I want to assure all shareholders that we will remain true to Cielo's vision and strategy as we advance towards commercialization. With that, we will now take questions. Operator?

[Operator Instructions] First question comes from [ Troy Bradley ], a private investor.

Yes. I would like to know the time line of the first build in Dunmore. And are you still on schedule for the 2023?

The time line for the Dunmore is really not set in concrete at this point. What we're working on currently right now is a few things. So the first, before we feel confident enough to issue an exact time line is we have to get to the steady-state, continuous production concept streamlined at Aldersyde. Given the -- if you think back just over the last few quarters, the company stated that we would be in that position. We've made a lot of modifications to the system. There were some things that actually worked very well and other things we need to refine on. So what we're doing right now, as I just mentioned, is we are looking at 3 components or 3 elements that really define what that is. That is the inlet feed system, the reactor itself and the waste management system. When we have those 3 elements lined up where we feel comfortable that we've got a continuous flow regime that is acceptable, we will -- that's one piece of the information that we'll have in conjunction with some of the more detailed engineering that we're doing so we can go back, revisit our plans on a 4,000-liter facility and feel confident that we are ready to commit to spending that level of capital. So to answer your question, please stay tuned. We will update our shareholders as we get closer to an exact time line on that.

[Operator Instructions] Your next question comes from [ Fred Am ], a private investor.

I'm [ Fred Am ] here calling from Halifax. I heard Don mention Halifax role in the future of Cielo, since you do have a deepwater port. I just wanted maybe a little bit of elaboration on that.

Don, do you want to take that question?

Sure. So we haven't confirmed any location yet in Halifax. We are speaking with some potential locations that come with feedstock. I'd love to move that thing forward, but it's going to have to fall in line with what Gregg just mentioned on timing. But definitely, I think it will be a real advantage to have deepwater port. It gives us a lot more opportunity for selling the fuel to the Canadian Navy, for instance, or may we become importers of plastics. There's so many opportunities once you get a deepwater port, as well it comes with real access. And so we've just 2 reported announced location, but we are working towards that.

Your next question comes from [ Rob Fraser with Royal Thomson ].

I would like to ask a question about the batch processing of products. Being a reactor in the catalyst, you would need to, I would presume, have different batches if you're going to run the end ties or if you're going to run plastic. I would presume that you couldn't just mix everything up and pick up through the catalyst. I was wondering if there was any plans on perhaps Medicine Hat being a real world type facility, Aldersyde being at last or Saskatchewan being something else for batch process.

Rob, thanks for the question. Yes, you're right. Like right now, just to give you an understanding, right now, the -- what we are currently processing at the Aldersyde facility is, of course, wood products. So this is waste material that comes from lumber mills that we're taking in. That is what we're currently feeding into the Aldersyde facility. Our system is configured to accept that particular biomass at the moment. And that is what we're working towards. I guess I want to call it, proof-of-concept that we can actually take a biomass like that and convert it into a fuel source on the end. That is our primary focus. That will apply, the processes will apply to whether it is a plastic or whether it's a railroad tie or rubber. We want to focus on one biomass and one big mass only. With this pilot plant that I just mentioned that we are in phases here of design, we want to have the ability to configure the front end of this thing to accept different biomass feeds. That's where we intend to work a little more with plastics and understand the type of material that we can produce from it. And that could serve for multiple purposes. It could be a product that we reuse again with as a slurry mix. It could be a sellable product in diesel itself and other outcomes. The railroad tie concept, of course, is one that we are also looking at as well. We've got to run further tests on the type of diesel that we get on the back end of it, the amount of scrubbing that we have to do to get it into a sellable product, et cetera. So these are all very doable things. But our purpose right now is to stay focused on getting one biomass that we know works. And we can say we've got a revenue stream that will allow us to essentially move to the next types of biomass that we can introduce into our systems.

[Operator Instructions] Your next question comes from [ Carmen Caldero ] as a private investor.

[indiscernible] you're actually going to be like you've been running and saying you've been producing some sort of diesel or liquid at the end of this run. And isn't it sellable even if it's not the high grade, so at least you can generate some revenue, showing revenue on your balance sheet?

[ Carmen ], thanks for the question. You're right. So we have been generating diesel. In fact, as we speak right now, we're producing diesel. The thing runs in current in batch mode. And the diesel that we do have inventory, you're actually right, we can sell it. We're inventorying some of this stuff because we still use it as a slip stream back into the system as we continue to run our different trials. As I mentioned earlier, we're right now in the flows of firing up our diesel -- pardon me, our desulfurization units. So we're going to need enough stock to run it through the system to prove the desulfurization unit works. So you're right, as we move forward with this, we're going to move -- we're going to sell small batches of diesel as it becomes available. I also take this opportunity here to tell you about the -- how we've been producing diesel. If I look at what this company has been doing over the last year, let's say, we were producing diesel at a rate of -- fluctuated between 700 to 1,000 liters per hour, but it's in a cyclic form. It is on and off because of this batch concept that we currently have until we get into that steady-state production mode. Since then, until now, we had COVID, that we shut down the plant. We did a bunch of system modifications. We were looking at the feedback that that gave us. So it's been up and down inconsistently. So we haven't been producing as much diesel. But with this next turn that we're looking at right now, we expect to be in a state where we are approaching a steady-state production system. And at that point, we'll be able to start selling off volumes of diesel as we produce this, because we have a finite, limited amount of tankage available to us. And as we start filling these things, we will be selling it.

There are no further questions at this time. Mr. Gegunde -- apologies. It seems you have one more question from [ Erle Pelle with Pipeline. ]

I was just wondering what percentage of your biodiesel comes from the used oil you use to cut the waste with at the beginning of the process, that's like regards to your planned balance?

Thanks for the question, Erle. It's not -- I think contrary to popular belief out there, there's -- I think there's a strong presence in believing that a lot of the diesel motor, the used motor oil that we use is predominantly what ends up in our diesel product. There's a percentage of it definitely. And it will vary just depending on the -- how much catalyst we're putting into it, the temperatures that we're running at and how we're feeding it into the system and the residence time within the reactor. That range is anywhere from 20% all the way to 50% or less. And that is part of what we're working on right now. The small highlight that we're running right now is going to give us a lot more clarity and definition and granularity on how to improve on that mechanism. So it's -- when we're running this thing at continuous operational mode, that's a question I'd be able to answer with a lot more refinement. But it sits right now, there's a lot of variables and parameters that when we run this, it's not running at a continual mode, it is fluctuating. So that's where that is right now.

Your next question comes from [ Vince Farrell ], a private investor.

It's a bit of a 2-part question, I guess. Part 1 is around -- still not totally understanding the point of -- or the reason for another 60-liter product test facility when sort of Aldersyde was supposed to be that facility? And is Aldersyde not capable of doing a test that you're planning to do with the next one? And also looking at the operational time line from your investor presentation, Q3 of this year was supposed to have sort of expansion of Aldersyde to the 2,000 liters plus, which we're not there yet. Any idea on how far delayed we are on that or when you'll be putting together a new time line?

Thanks for the question, Vince. So I'll start maybe with your second question first, on the time line regarding Aldersyde. We would hope to have been to the point where we were expanding Aldersyde at this point. But that was based or predicated on the condition that we were able to produce at a constant rate. As I mentioned earlier, when you think back on the last quarter or actually 1.5 quarters in reverse, a lot of the system upgrades that were made, a lot of the tweaking to the system conditions that we did to the process, we just couldn't get it to a steady-state condition. We were very close, but we couldn't quite get it there. What we did learn from the modifications and changes that we made is an understanding of why it didn't work. So what we are doing right now is designing and engineering the 3 inputs that we know will get us to a state of steady-state production. Once we get that to that point and we verify and understand that it is running, that's when we can easily then start accelerating the capacity of Aldersyde to get it to a higher throughput of production. And your first question or an answer to your first question, why the new pilot, and wasn't Aldersyde supposed to do this for us, the question is, yes, no. So Aldersyde, the way I think of Aldersyde is it's a '57 Chevy, okay? And it's going to give us a few things. It will take us to commercialization. It will be a proof-of-concept on a very core scale. But what the Edmonton pilot or the Fort Saskatchewan pilot that we are building is going to give us another degree of very granular engineering that we need to design a new steady -- gee, I lost my words there -- holy cow, just froze -- a brand new state-of-the-art -- that's the word I was trying to get out -- state-of-the-art facility that it has modern technology in it. It has the ability to experiment with more than one reactor. It has the ability to adjust parameters. When you think of something the size of Aldersyde, if I wanted to change a reactor, if I wanted to modify a lot of those things and add and subtract, these are big scale items. With a small pilot, it is a lot cheaper and a lot quicker to make modifications and get the engineering information, the material balance characteristics that we need in order to clearly define what the path forward looks like. So the 2 work in parallel. Aldersyde is proof of concept, let's get some production going and it's going to teach us some lessons along the way. But the pilot is a more refined view of what engineering needs to go into the system that gives us a very high degree of confidence when we get into the 4,000 liter per hour design facility.

Your next question comes from [ George Barnaco ], a private investor.

Your 4,000-liter facility, is that set to run perpetual 24 hours a day, 7 days a week?

George, if I heard you correctly, the question was when we build a 4,000 liter per hour facility, will that work 24 hours a day, 7 days a week. Was that your question?

That is one, yes.

Yes, that is certainly our intent. What I just mentioned here is we're not going to start building anything of that magnitude until we have and understand that anything we engineer and construct, that it will run for 24 hours a day, 7 days a week. Of course, there's always maintenance and take down times on these things, but that is our intent is have a continuous flow environment or regime.

Right. And the 4,000 liters per hour, in revenue stream, what does that represent to us?

Don, you've got those numbers a little more handier? Do you want to maybe speak to that?

Sure. It's roughly -- so if we do 4,000 liters an hour of diesel, we run 24 hours a day, 341 days a year. And say, today, it's a highway diesel, highway diesel is setting record prices right now, let's say, CAD 2.17 a liter, that should bring in revenues around CAD 71 million a year.

And what is the anticipated costs on that produce?

Anticipated capital costs?

Yes, and production costs.

Well, the anticipated capital costs, I would say it's a little bit premature given the fact that we haven't have a wholesome engineering design on the table right now. But just in rough numbers, we're thinking about CAD 50 million to CAD 80 million depending on the type of feed systems that would be designed and a few other, I guess, characteristics about the facility itself. The operational cost for these, that's still right up in the year right now. I can't give you an exact number. We will, as we start understanding -- first of all, as we start understanding how the Aldersyde facility operates at a steady state, what are the true operational costs that will be associated with that, that's when we can answer those questions a little more in more refinement. But we've got to learn a few of these things for us as we go. All we can do right now is give ranges, because we don't have all the details that we need to really verify and say, we're very comfortable in saying this is what it's going to cost us, is going to cost us to run a 4,000 liter per our facility.

Your next question comes from [ Kent ], a private investor.

My question is, you said that you'll have this pilot up and running by Q1 2022. Do you mean Cielo's Q1 or the calendar year Q1?

Kent, that's a good question. Thanks for that. I'm talking about Q1 as in the end of the first quarter of 2021.

Your next question comes from [ Joseph Paul ], a private investor.

Just a couple of clarifying questions. You spoke about the -- trying to get the feedstock. Right now, you're working on wood. Will the facilities in the future -- I know you've done some videos for municipalities at landfills and whatnot. Will your reactors be able to handle multiple waste streams at the same time? Or are you going to need multiple reactors to handle that type of vision?

Joe, thanks for that question. That's a very good question, actually. So as it sits right now, the reactor that we currently have, we know that it will process wood chips fairly well. We also know that in historical, some of the work that Don and his guys have done in the past with the simpler reactors, they were able to produce plastics and they've run some rubber and other biomasses. So in general, the answer is yes. But at the same time, too, we're going to -- part of this pilot is actually probably tweaking the reactors. Something I find very cool actually, that we're working on as well as part of this pilot is that we've always been talking about only one reactor. And we're actually looking and we've actually allowed the space for this pilot we're building to put in multiple reactors, not just 1, not just 2, but probably all the way up into 4. And what that will allow us to do is basically running in series and run in parallel. Why that's important is because as we learn more from this, you may find out that running plastics may require multiple passes through the reaction. So it may require multiple stages of reaction. And in order to get to a state of continuous flow, we may also have to run them in parallel. So we have that, in fact, that continue slow state. So one reactor may work, but we may have to modify them to suit the application.

Your next question comes from [ Jeff Sei], a private investor.

Yes. You used to have a strategic partner that I think was called Renewable U that was going to borrow money and build multiple plants. What's the status of that relationship?

Chris, do you want to take this question?

Sure, happy to do that. So at the end of the day, as it concerns to that relationship, there really hasn't been any change. What we have in place is several memorandums of understanding. Really, the point of those memorandums is to work towards the negotiation of a joint venture agreement with Renewable U. And as we've indicated in the past, we're continuing to work in that direction. So as that work is completed, we'll certainly update shareholders. But the bottom line is there just really isn't any change. Renewable U is still a partner that we're working with.

Thank you. There are no further questions at this time. Mr. Gegunde, you may proceed.

Great. Well, thank you. Before I turn it back to the operator to conclude this, thank you again for joining us on this call today. We really look forward to keeping you apprised on our progress. Thank you for your time today.

Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines. Have a great day.